I just saw a show on a channel here in the U.S. about Los Angeles California. That is the largest container port in the United States. Years ago it was Oakland. Im sure they also still have a large one there too. From Los Angeles the containers go onto a Burlington Northern Santa Fe train with 4 locomotives. That train takes them to Ft. Worth Texas. That is a major distribution point for several large U.S. companies.
Its an amazing operation. Containers really arent my thing. Im familiar with companies like Horizon and Maersk. I have no investments at all in the container side of operations.
I think once a recovery package is in place in the U.S. the European Union will follow suit to some extent.
Tomorrow they are talking about bailing out Citigroup Bank.
The U.S. govt is going to give them the equivelent of a Bridge Loan. Their valuation was 180 billion one year ago.
Today it is 20 Billion. They are planning to lay off 53,000 people very soon if they don't get bailed out.
I think they are going to lay those people off anyway and replace half of them with new employees. The new employees will be paid less have little or no internet access at work and not be permitted to use hand held devices for talk or texting. Basically they will have an employee handbook the size of the King James Bible.
Since they are an what amount to an institutional employer they will be under pressure to re hire many new people after their initial layoffs. This of course is just my opinion but its an opportunity for them to start fresh. The era of mortgage backed securities and the excesses that went along with them is over. Those who worked in that environment at the financial houses as middle managers will be ushered out.
The major auto companies in the U.S. will see either a bridge loan of 25 billion for help through 2009 or bankruptcy . Jack Walsh the former CEO of General Electric has stated that bankruptcy would give them an opportunity to rid themselves of many jobs controlled by the UAW United Auto Workers Union International which operates in the U.S. and Canada.
It is said that for every 1 assembly line worker the 3 major U.S. auto makers employ there are 7 jobs further down the stream of components and accessories that go into U.S. auto's.
Either way it will get sorted out in 2009 because as institutional employers, the U.S. cannot lose those jobs even though sentiment here is negative. The moral of the U.S. economy and industry which is still large by world standards cannot suffer the blow of losing these jobs and institutions.
GM, Ford and Chrysler have made strides in the last few years to improve and actually do make a better product than ever. Unfortunately the U.S. auto industry has been on a downward spiral since the riots in Detroit in 1967.
14 square miles of Detroit were burned to the ground in 5 days of rioting in 1967 starting on July 23rd of that year. They didnt end until July 29th. 48 people died , 1150 were injured and 6000 people were arrested. By far it was the worst act of civil disobedience ever in U.S. history. The wounds of this have yet to heal.
Sadly their are still burned out houses on empty blocks of that city stand as reminders of a bygone era.
Up until that time the U.S. automakers stood alone as masters of the auto industry in North America.
I am optomistic that the U.S will find a way to pull through this messy situation. Even though the world economy looks bad at the present time it should recover within a year or so.
The new more conservative outlook in the banking sector should be a more stable atmosphere for the world economy.
Dry bulk should recover sometime soon. No one is going to know when though. Once it does though alot of people are going to wish they had bought in at these ridiculous levels.
I believe many of the ships marked for delivery in 2009 are going to be delayed especially when the smaller shipyards in the far east go bankrupt. That is not a matter of time but a matter of when. Many of the larger yards are going to downsize which will reduce their capacity and output.
Since the world economy is a copycat economy i look for layoffs in all sectors many of which have already happened.
Shipbuilding will not be the exception. This will greatly reduce the new Dead Weight Tonnage expected to be delivered in 2009. Once they slow down that gigantic mechanism it will take years for them to once again produce those ships in such great numbers.
It is much riskier for a bank to finance a shipbuilding than an individual shipment. Shipbuilding takes years so the exposure is much greater.
The way i see it Golden Ocean is well positioned to benefit from all of this. Lets hope so....!!!!!
I know i need a break from all of this....
Have a good day...
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